Gross Rental Yield (GRY)
Definition: What is Gross Rental Yield?
Gross Rental Yield (GRY) is a quick screen of income potential: it expresses a property’s annual gross rent as a percentage of the property’s purchase price or current market value. Because it’s “gross,” the calculation is made before expenses like cleaning labor, utilities, management, maintenance, commissions, or taxes.
For short-term rentals, “gross rent” reflects what your listing actually earned from stays—driven by ADR, occupancy, seasonality, and upsells—without subtracting operating costs.
How to Calculate Gross Rental Yield
Use consistent inputs and one clear formula.
- Gross Annual Rent: Sum nightly rate revenue and owner-retained fees (cleaning, pets, parking, early check-in). Exclude pass-through lodging taxes and refundable deposits. See Gross Booking Revenue.
- Property Value: Use either the purchase price (optionally plus closing and initial setup) or today’s market value.
- Apply: GRY = (Gross Annual Rent ÷ Property Value) × 100.
Example: A cabin valued at $300,000 earns $24,000 in gross annual rent. GRY = ($24,000 ÷ $300,000) × 100 = 8%.
Choosing the Denominator (Value)
- Acquisition view: Purchase price (add closing/setup for a conservative lens).
- Hold/portfolio view: Current market value to compare properties across markets and cycles.
- Be consistent: Switching denominators mid-analysis skews comparisons.
GRY vs. Net Yield vs. Cap Rate
- GRY: Before expenses; fast screen for market or segment comparisons.
- Net Yield: After operating costs (taxes, insurance, utilities, cleans, management).
- Cap Rate: Based on NOI; better proxy for asset performance and valuation.
Where GRY Helps
- Market analysis: Compare lake towns, waterfront vs. in-town, or cabin vs. condo.
- Deal screening: Narrow a longlist quickly before deeper NOI modeling.
- Revenue strategy: Tie yield changes to pricing moves (dynamic pricing), event weeks, and LOS rules.
More Examples
- Urban vacation rental: Value $400,000; gross annual rent $36,000 → GRY = 9%.
- Beachfront home: Value $600,000; gross annual rent $48,000 → GRY = 8%.
Related Terms
- Cap Rate
- Net Operating Income (NOI)
- Gross Booking Revenue (GBR)
- Average Daily Rate (ADR)
- Occupancy Rate
- Revenue per Available Room (RevPAR)
- Dynamic Pricing
- Length of Stay (LOS)
Frequently Asked Questions
Should I include platform service fees or commissions in GRY?
No. GRY is based on gross rent before expenses. Commissions and payment fees reduce NOI, not GRY.
Do cleaning fees count toward gross rent?
Include them only if you retain them as your revenue. If a third party or platform charges and keeps the fee, exclude it.
What occupancy should I assume for projections?
Model realistic seasonality. Use trailing occupancy from your PMS or comps; pair with target ADR to build gross rent, then compute GRY.
Can GRY be high but the investment still underperform?
Yes. GRY ignores expenses and CapEx. Always follow with NOI and Cap Rate analysis, and stress-test costs.
Is GRY useful for hotels as well as vacation rentals?
It’s a quick benchmark for any lodging asset, but hotels are better evaluated with NOI-based metrics and operating ratios alongside GRY.
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